Central bank “policies” these days are in many ways so comical that they remind me of some of the classic old Monty Python sketches. You can almost imagine how they might pen a sketch today involving central bankers.

John Cleese would clearly have to be the Central Banker with maybe Eric Idle as the Saver!

Scene: A lavishly appointed building in a major finance centre. A person is standing nervously outside a door marked “Central Bank”. They hesitate briefly, then knock:

Central Banker (CB): Come in!

Saver: Good morning, I’d like to talk to someone about my savings.

CB: Excellent, we central bankers encourage savings

Saver: Oh, well I’m glad to hear it. You see I’d like to save some money by depositing it at my bank but, after allowing for inflation, the rate of interest I receive means I’d actually be losing money!

CB: Yes, wonderful, isn’t it?

Saver: What? How can that be wonderful?

CB: Because you are thereby disincentivised from saving.

Saver: But I thought you said you were in favour of savings?!

CB: We are……just not that kind of saving.

Saver: Oh…..I thought bank deposits were one of the best places to save money safely.

CB: They were……..but, fortunately, that is no longer the case.

Saver: Why not?

CB: Because we want you to save in another way.

Saver: Oh….I see…..have you created a new type of bank savings account?

CB: Hmmm……..not exactly.

Saver: So where do you want me to save?

CB: In stock markets…..and maybe also in corporate bond markets.

Saver: But that’s not saving……that’s investing…. speculating, even……and doesn’t that carry risks?!

CB: Not anymore!

Saver: Why not?

CB: Because we now effectively guarantee that you will not lose money if you invest in stock or bond markets.

Saver: 100% guarantee?

CB: Silly person…….of course not 100%.....you just have to trust us.

Saver: Now look……you seem like a nice guy and I don’t want you to take offence but…….from what you’ve just said I would need to be slightly unhinged to trust you with my savings…..

CB: No offence taken……you see this is where all you savers get it all wrong…….we’ve been helping people manage their savings for a very long time..……I think we’ve done pretty well since then.

Saver: Apart obviously from the South Sea Bubble in 1720

CB: Granted……a mere blip

Saver: Or the 1772 Credit Crisis?

CB: Swiftly resolved

Saver: Or the Panic of 1825?

CB: An overaction……

Saver: The Credit Crisis of 1866?

CB: A tame affair

Saver: The Crash of 1929…

CB: Ah the Roaring 20’s…….no permanent harm done!

Saver: The 1973 Banking Crisis…

CB: A storm in the proverbial teacup….

Saver: The Tech Crash of 2000

CB: Ah yes……that’s when we began to see the light!

Saver: The Global Financial Crisis in 2008

CB: Our finest hour…...until 2020 of course!

Saver: So……apart from 1720, 1772, 1825, 1866, 1929, 1973, 2000 and 2008…….we have absolutely nothing to worry about ?

CB: Precisely!

Saver: But how can you make sure that another crisis doesn’t evolve and that markets don’t fall and we end up losing money?

CB: Well….. and this is the good bit……..we can now just magic money out of thin air and use that to support stock and bond prices!

Saver: Print money?! Is that even legal?

CB: Of course it is.

Saver: But if I did that I’d be thrown in jail.

CB: And quite rightly too.

Saver: But if you do it, that’s ok?

CB: Exactly.

Saver: I’m obviously in the wrong room!

CB: Not at all.

Saver: Oh, I get it……this is one of those joke TV programmes right?

CB: Not at all.

Saver: Seriously?!

CB: Oh……very seriously.

Saver: But doesn’t printing money just devalue it.

CB: Indeed, it does.

Saver: And no one cares about that?

CB: Well this is the even better bit…….apparently not!

Saver: But surely someone is eventually going to work out that what you are involved in is just a giant Ponzi scheme?!

CB: Using words like “Ponzi” is, we believe, overly emotive and emphasizes negative connotations which ignore the communal good achieved by helping people become wealthier.

Saver: But that assertion presupposes you have any surplus cash to invest in the first place.

CB: Well, logically of course that is correct. But it is also logically correct to deduce that if someone does not have any surplus wealth to invest then we are not obliged to consider their requirements……which, in this case, would mean you would not have come to see us today and this conversation would not have taken place……….is there anything else I can help you with?

The Saver walks out looking totally baffled and shaking his head…………

Yours faithfully,

The LeifBridge Team

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